What effect will this adjusting journal entry have on the accounting records?
A) Increase income
B) Decrease net income
C) Decrease expenses
D) Increase assets

Question

What effect will this adjusting journal entry have on the accounting records? 
A) Increase income 
B) Decrease net income 
C) Decrease expenses 
D) Increase assets

Quizplus · Accepted Answer

Adjusting entries are made to ensure that the financial statements reflect the correct account balances and to record transactions that took place but were not yet recorded. If this adjusting entry is for accrued expenses or unearned revenue, it will decrease net income because it recognizes expenses that have not yet been paid or revenue that has not yet been earned. None of the other choices are relevant for an adjusting entry.

What Effect Will This Adjusting Journal Entry Have on the Accounting